When the going gets tough, prophets of gloom and doom are available in plenty. It might be prudent to ignore them for a change. Instead of deriving a sense of vicarious pleasure from endlessly analysing how bad things are in the economy and markets, and then finding a convenient door to lay the blame on, the various stakeholders in the economy should put their heads together and take some action.

To begin with, it is important to understand a few facts. The fundamentals of the economy are not half as bad as the vicious fall in the financial markets would suggest. Take GDP growth for instance. We have had a fantastic monsoon, so god is with us. This is all set to yield a good harvest, and a spurt in consumption spending typically comes in its wake. Merchandise exports seem to be picking up as the US economy, and finally Europe, show signs of slow recovery. Services like IT are also likely to do better, given the recovery in the West and a cheaper currency. Projects in key infrastructure areas like power are gaining traction, thanks to the government's efforts to expedite matters. Put all this together and a growth rate in the ball-park of 5.5 per cent seems eminently possible for 2013-14. This is, incidentally, a growth rate that both developing and emerging markets would give an arm and a leg for.

The irony of today's situation is that the current account deficit (CAD) — the one thing that everyone likes to blame for India's woes — is set to improve considerably this year. The consensus among economists is that the CAD this fiscal is unlikely to breach 4 per cent (about $75 billion), compared to 4.8 per cent of the GDP ($88 billion) last fiscal. The improvement is likely to be on the back of improving exports, reducing gold and oil imports. Besides there were hefty food imports last year to meet the supply shortages created by a delayed monsoon.

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